Naidu said the decision was taken in the state Cabinet meeting on September 1.

The announcement was expected earlier this week but was delayed, as per sources, due to astrological reasons.

Land prices had already soared in the stretch between Guntur and Vijayawada towns in anticipation of the announcement.

However, opposition parties are not happy with the choice and will protest against the development.

Telangana was carved out of Andhra Pradesh in June and the present state capital Hyderabad will be shared between the two states for 10 years. Post that period, Telangana will have claim over the IT city.

Naidu has said that he will create a new capital and model it on the lines of Singapore.